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Enthusiast Gaming Reports Second Quarter 2023 Results

LOS ANGELES, Aug. 14, 2023 (GLOBE NEWSWIRE) -- Enthusiast Gaming Holdings Inc. (“Enthusiast Gaming” or the “Company”) (NASDAQ: EGLX; TSX: EGLX), a leading gaming media and entertainment company, today announced financial results for the three and six months ended June 30, 2023 (“Q2 2023”).

Q2 2023 Financial Highlights

  • Revenue was $42.6 million in Q2 2023 compared to $51.1 million in Q2 2022. The decrease was concentrated in low-margin revenue streams, reflecting the lower CPMs in the programmatic ad market and the strategic focus on higher margin revenue.
  • Gross profit was $15.0 million, with margins expanding 520 basis points year-over-year to 35.2%.
  • Brand Solutions revenue of $8.7 million and subscription revenue of $4.0 million combined for nearly 30% of total revenue in Q2 2023, compared to approximately 25% in Q2 2022. Repeat customers in Brand Solutions accounted for 62% of deals and 66% of Brand Solutions revenue.
  • Ended the quarter with $2.7 million of cash along with an unused operating facility of $5.0 million, for total available cash of $7.7 million as at June 30, 2023.        

“Our strategic initiatives, which are focused on diversifying revenue and expanding margins to move us toward near-term profitability, continue to take hold,” commented Nick Brien, Chief Executive Officer. “The underlying trends of our business are highly encouraging, suggesting significant improvements in our consolidated results in the second half of 2023 and into 2024. First, we are growing our higher yield and higher margin revenue, including Brand Solutions, subscriptions, and events, which increased to 34% of revenue. Second, we are accelerating our integrated Brand Solutions efforts, as evidenced by us signing the largest direct advertising sale in Company history in July tied to the upcoming season two of Tuesday Night Gaming (NFL TNG) in partnership with the National Football League.”

“At the same time, we made the decision to de-emphasize non-core and unprofitable revenue, including ending our relationship with certain unprofitable creator channels, impacting revenue in the short-term but driving a significant improvement in our gross margins year-over-year,” continued Brien. “We are also investing in profitable growth streams for the Company, including our popular U.GG, Icy-Veins, and The Sims Resource products, and expect these investments to drive improved performance in the second half of the year.”

“We maintain the largest audience in the gaming ecosystem according to Comscore, creating an enviable platform for sustainable growth,” added Brien. “With the start-up costs for our NFL TNG partnership already behind us, we expect the second season of NFL TNG will deliver higher margins and continued growth. Based on the success of the NFL TNG partnership, we are in active discussions with other professional sports leagues. We have also planned a robust slate of high-margin live events during the second half of the year. Combined with incremental improvements in our CPMs and additional direct sale partnerships, our expectations of achieving profitability are coming into clear focus.”

Q2 2023 Operational Highlights

  • Secured renewals and new additional business with key notable advertisers including Coca-Cola, XBOX, Netease, Paramount Pictures, Universal Pictures, Pokerstars, Nickelodeon, LEGO, US Navy, Toyota, Nintendo US, KFC, State Farm, Shell, and Best Buy. Renewals and additional business with existing customers accounted for 66% of Brand Solutions revenue in Q2 2023.
  • Pocket Gamer Connects (PGC), the Company’s B2B gaming events platform, drew attendance of around 700 participants at its Seattle event. Additionally, PGC’s first-ever event in Dubai, GameExpo Summit, not only expanded its global footprint, but also enhanced our leadership in the growing MENA market, with more than 1,300 attendees from more than 60 countries.
  • Luminosity Gaming, the Company’s esports division, won 11 championships in Q2 2023. Additionally, aligned with our commitment to diversity and inclusion, Luminosity Gaming formed two new all-female teams: Luminosity Gaming Red and Luminosity Gaming Green which compete in Apex Legends.
  • U.GG, the Company’s data-driven and insights platform for League of Legends, recently expanded to include content and support for World of Warcraft (WoW), one of the largest massive multiplayer online role-playing (MMORPG) games in the world.
  • Icy Veins, the Company’s strategy and guide platform for popular Activision-Blizzard game titles, including WoW, recently expanded to include Diablo IV.
  • Paid subscribers were 272,000 at June 30, 2023, a 1% decrease from 275,000 at March 31, 2023 and 5% increase from 258,000 at June 30, 2022, while revenue per subscriber increased on both a quarter-on-quarter and year-over-year basis.
  • The Company extended its position as the #1 Gaming Property for unique visitor traffic in the United States, reaching a new record of 56 million Unique Visitors, based on the latest digital media ratings from Comscore. The results represent 28% year-over-year growth in Unique Visitor traffic to Enthusiast Gaming’s digital media Property of gaming communities, content, and creators (Comscore Media Metrix® Multi-Platform, Total Audience, May 2023, U.S.).

Second Quarter 2023 Results Comparison

Revenue was $42.6 million in Q2 2023, a 17% decrease compared to $51.1 million in Q2 2022. Subscription revenue increased 13% to $4.0 million, offset by Media and Content which decreased 19% to $36.9 million, and Esports and Entertainment which decreased 22% to $1.7 million. During the quarter, the Company experienced lower programmatic CPMs on its web and video platforms, similar to the trend of the broader programmatic market, and generated fewer video views due to the strategic decision to separate from a number of non-profitable creator channels. Brand Solutions (included in revenue) decreased by 6.6% to $8.7 million in Q2 2023 compared to $9.3 million in Q2 2022.

Gross profit decreased 2% to $15.0 million in Q2 2023 compared to $15.3 million in Q2 2022, with gross margin expanding 520 bps year-over-year to 35.2% from 30.0% in Q2 2022.

Net loss was $10.2 million in Q2 2023, compared to $16.9 million in Q2 2022. Net loss per basic and diluted share was $0.07 in Q2 2023 compared to $0.12 in Q2 2022.

As of June 30, 2023, the Company’s cash balance was $2.7 million compared to $7.4 million as of December 31, 2022. The $4.7 million decrease is primarily the result of a $1.2 million outflow in cash from operations and $2.2 million of repayments on the Company’s Term Credit. The Company had $5.0 million available on its operating credit facility as of June 30, 2023, for total available cash of $7.7 million.

Organizational Updates

In June, 2023, Shinggo Lu was promoted to Chief Product Officer and Alan Liang was promoted to Chief Technology Officer. Shinggo and Alan are the founders of U.GG, the Company’s data-driven and insights platform focused in League of Legends and recently expanded into World of Warcraft. U.GG joined the family of Enthusiast Gaming in 2021.

Conference Call

Management will host a conference call and webcast on August 14, 2023, at 5 p.m. ET to review and discuss its Q2 2023 results. Conference call details:

A replay of the webcast will be available on the Investor page of the Enthusiast Gaming website at

Supplemental Information

Certain information provided in this news release is extracted from financial statements and management’s discussion & analysis (“MD&A”) of the Company for the three and six months ended June 30, 2023, and should be read in conjunction with them. It is only in the context of the fulsome information and disclosures contained in the financial statements and MD&A that an investor can properly analyze this information. The financial statements and MD&A have been published on the Company’s profile on SEDAR and EDGAR. All amounts are in Canadian dollars.

About Enthusiast Gaming

Enthusiast Gaming is a leading gaming media and entertainment company, building the largest platform for video game enthusiasts and esports fans to connect and compete worldwide. Combining the elements of its five core pillars: creators, content, communities, games, and experiences, Enthusiast Gaming provides a unique opportunity for marketers to create integrated brand solutions to connect with coveted Gen Z and Millennial audiences. Through its proprietary mix of digital media, content and gaming assets, Enthusiast Gaming continues to grow its network of communities, reflecting the scale and diversity of gaming enthusiasts today.

Investor Contacts

Enthusiast Gaming – Alex Macdonald, Chief Financial Officer
FNK IR – Rob Fink / Matt Chesler, CFA

Neither the Toronto Stock Exchange nor its Regulation Services Provider (as that term is defined in the policies of the exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward-Looking Statements

This news release contains certain statements that may constitute forward-looking information under applicable securities laws. All statements, other than those of historical fact, which address activities, events, outcomes, results, developments, performance or achievements that Enthusiast Gaming anticipates or expects may or will occur in the future (in whole or in part) should be considered forward-looking information. Often, but not always, forward-looking information can be identified by the use of words such as “plans”, “expects”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, or “believes” or variations (including negative variations) of such words and phrases, or statements formed in the future tense or indicating that certain actions, events or results “may”, “could”, “would”, “might” or “will” (or other variations of the forgoing) be taken, occur, be achieved, or come to pass. Forward-looking statements in this news release include, but are not limited to, statements regarding trends in certain financial and operating metrics of the Company, and expectations relating to the financial performance and the financial results of future periods.

Forward-looking statements are based on assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, including, but not limited to, expectations and assumptions concerning: interest and foreign exchange rates; capital efficiencies, cost saving and synergies; growth and growth rates; the success in the esports and gaming media industry; the Company’s growth plan, and judgment applied in the application of the Company’s accounting policies and in the preparation of financial statements in accordance with applicable financial reporting standards. While Enthusiast Gaming considers these assumptions to be reasonable, based on information currently available, they may prove to be incorrect. Readers are cautioned not to place undue reliance on forward-looking statements. In addition, forward-looking statements necessarily involve known and unknown risks, including, without limitation, risks associated with general economic conditions; adverse industry events; and future legislative, tax and regulatory developments. Readers are cautioned that the foregoing list is not exhaustive. For more information on the risks, uncertainties and assumptions that could cause anticipated opportunities and actual results to differ materially, please refer to the public filings of Enthusiast Gaming which are available on SEDAR at Readers are further cautioned not to place undue reliance on forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement and reflect our expectations as of the date hereof, and thus are subject to change thereafter. Enthusiast Gaming disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.


Enthusiast Gaming Holdings Inc.      
Condensed Consolidated Interim Statements of Financial Position   
As of June 30, 2023 and December 31, 2022      
(Unaudited - Expressed in Canadian Dollars)      
     June 30, 2023 December 31, 2022 
  Cash $2,741,788 $7,415,516  
  Trade and other receivables  32,645,717  37,868,107  
  Investments  125,000  125,000  
  Loans receivable  -  50,935  
  Income tax receivable  -  367,092  
  Prepaid expenses  1,280,633  2,017,004  
 Total current assets  36,793,138  47,843,654  
  Property and equipment  157,427  180,621  
  Right-of-use assets  1,605,459  2,099,996  
  Investment in associates and joint ventures  2,383,861  2,450,031  
  Long-term portion of prepaid expenses  273,533  279,814  
  Intangible assets  110,461,565  116,967,438  
  Goodwill  170,168,930  171,615,991  
 Total assets $321,843,913 $341,437,545  
  Accounts payable and accrued liabilities $35,797,853 $32,823,320  
  Contract liabilities  4,902,397  5,380,378  
  Income tax payable  242,785  129,485  
  Current portion of long-term debt  4,352,940  17,431,625  
  Current portion of deferred payment liability 79,205  2,391,863  
  Current portion of lease liabilities  870,447  872,429  
  Current portion of other long-term debt  9,678  10,891  
 Total current liabilities  46,255,305  59,039,991  
  Long-term debt  10,891,725  -  
  Long-term portion of deferred payment liability 1,612,364  1,451,939  
  Long-term lease liabilities  1,039,764  1,478,438  
  Other long-term debt  141,141  144,844  
  Deferred tax liability  23,729,627  24,671,326  
 Total liabilities $83,669,926 $86,786,538  
 Shareholders' Equity      
  Share capital  444,474,076  442,781,376  
  Contributed surplus  33,321,563  30,402,742  
  Accumulated other comprehensive income  6,494,599  8,629,848  
  Deficit  (246,116,251) (227,162,959) 
 Total shareholders' equity   238,173,987  254,651,007  
 Total liabilities and shareholders' equity $321,843,913 $341,437,545  

Enthusiast Gaming Holdings Inc.         
Condensed Consolidated Interim Statements of Loss and Comprehensive Loss       
For the three and six months ended June 30, 2023 and 2022         
(Unaudited - Expressed in Canadian Dollars)         
     For the three months ended For the six months ended
     June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022
 Revenue $42,598,769 $51,119,028 $85,478,735 $98,286,566 
 Cost of sales  27,616,077  35,775,863  53,730,485  69,452,022 
 Gross margin  14,982,692  15,343,165  31,748,250  28,834,544 
 Operating expenses         
  Professional fees  690,063  667,681  1,143,399  1,592,502 
  Consulting fees  1,595,468  1,777,003  2,903,952  3,255,177 
  Advertising and promotion  938,613  427,618  2,394,724  755,065 
  Office and general  1,930,338  2,681,589  4,222,121  4,944,494 
  Annual general meeting legal and advisory costs  -  2,237,200  -  2,237,200 
  Salaries and wages  9,932,310  9,112,903  19,139,334  17,809,778 
  Technology support, web development and content  4,156,966  3,800,203  9,452,990  7,259,071 
  Esports player, team and game expenses  645,715  1,483,360  1,281,162  2,994,848 
  Foreign exchange loss (gain)  22,851  (633,789) 137,408  (625,202)
  Share-based compensation  1,788,490  3,128,625  2,918,821  4,514,806 
  Amortization and depreciation  2,886,075  4,435,374  6,224,098  9,202,398 
 Total operating expenses  24,586,889  29,117,767  49,818,009  53,940,137 
 Other expenses (income)         
  Transaction costs  -  114,853  -  114,853 
  Share of net (income) loss from investment in associates and joint ventures (106,277) (931,901) 66,170  (1,227,942)
  Interest and accretion  605,385  1,119,109  1,215,725  2,549,778 
  Loss on settlement of deferred payment liability  -  3,302,824  -  3,302,824 
  Loss (gain) on revaluation of deferred payment liability  374,101  143,775  202,077  (871,763)
  Gain on player buyouts  -  (480,537) -  (480,537)
  Interest income  (1,514) (1,320) (62,721) (2,721)
 Net loss before income taxes  (10,475,892) (17,041,405) (19,491,010) (28,490,085)
 Income taxes         
  Current tax expense  22,279  196,717  225,771  307,246 
  Deferred tax recovery  (281,579) (357,892) (763,489) (884,172)
 Net loss for the period  (10,216,592) (16,880,230) (18,953,292) (27,913,159)
 Other comprehensive (loss) income         
 Items that may be reclassified to profit or loss         
  Foreign currency translation adjustment  (2,141,800) 3,068,297  (2,135,249) 1,859,867 
 Net loss and comprehensive loss for the period $(12,358,392)$(13,811,933)$(21,088,541)$(26,053,292)
 Net loss per share, basic and diluted $(0.07)$(0.12)$(0.12)$(0.20)
 Weighted average number of common shares          
  outstanding, basic and diluted  152,171,249  138,745,383  151,970,362  136,189,630 

Enthusiast Gaming Holdings Inc.      
Condensed Consolidated Interim Statements of Cash Flows      
For the six months ended June 30, 2023 and 2022      
(Unaudited - Expressed in Canadian Dollars)      
    June 30, 2023 June 30, 2022 
 Cash flows from operating activities      
 Net loss for the period $(18,953,292)$(27,913,159) 
 Items not affecting cash:      
 Amortization and depreciation  6,224,098  9,202,398  
 Share-based compensation  2,918,821  4,514,806  
 Interest and accretion  137,327  2,143,527  
 Deferred tax recovery  (763,489) (884,172) 
 Share of net loss (income) from investment in associates and joint ventures 66,170  (1,227,942) 
 Loss on settlement of deferred payment liability  -  3,302,824  
 Loss (gain) on revaluation of deferred payment liability  202,077  (871,763) 
 Foreign exchange loss (gain)  24,480  (492,716) 
 Gain on player buyouts  -  (480,537) 
 Shares for services  -  84,388  
 Provisions  165,145  -  
 Changes in working capital:      
 Changes in trade and other receivables  5,108,139  1,255,456  
 Changes in prepaid expenses  736,371  (1,598,380) 
 Changes in loans receivable  -  125,995  
 Changes in accounts payable and accrued liabilities  2,974,533  7,128,498  
 Changes in contract liabilities  (477,981) 310,858  
 Changes in income tax  594,894  174,993  
 Income tax paid  (114,502) (42,002) 
 Net cash used in operating activities  (1,157,209) (5,266,928) 
 Cash flows from investing activities      
 Cash paid for mergers and acquisitions  -  (2,937,520) 
 Cash acquired from mergers and acquisitions  -  1,748,602  
 Proceeds from player buyouts, net of transaction costs  -  480,537  
 Repayment of deferred payment liability  (844,350) (472,833) 
 Acquisition of intangible assets  (27,488) -  
 Acquisition of property and equipment  (17,156) (4,165) 
 Net cash used in investing activities  (888,994) (1,185,379) 
 Cash flows from financing activities      
 Repayment of long-term debt  (2,176,470) (1,000,000) 
 Proceeds from exercise of options  -  69,821  
 Repayment of other long-term debt  (6,775) (2,826) 
 Lease payments  (439,184) (417,092) 
 Net cash used in financing activities  (2,622,429) (1,350,097) 
 Foreign exchange effect on cash  (5,096) 87,484  
 Net change in cash  (4,673,728) (7,714,920) 
 Cash, beginning of period  7,415,516  22,654,262  
 Cash, end of period $2,741,788 $14,939,342  


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